Credit Suisse Says Didn’t Sell Espirito Santo Notes It Created

Aug. 19 (Bloomberg) — Credit Suisse Group AG said it didn’t advise clients of Banco Espirito Santo SA or other investors on securities the Portuguese group reportedly used to help finance the family’s business interests.

“At no point did Credit Suisse distribute, sell to or advise any clients of BES and its affiliates, whether retail or institutional, nor any other third party” in relation to the notes it created, the Zurich-based bank said in a statement today.

The bank said it was responding to a Wall Street Journal article on Aug. 17 which said Credit Suisse helped sell billions of dollars of securities that contributed to toppling the Portuguese bank. The newspaper had said it was unclear what role Credit Suisse had in selling the securities to bank customers.

Banco Espirito Santo, once Portugal’s biggest lender by market value, was broken up in a bailout by the government earlier this month, leaving junior creditors with the bank’s bad assets. The bank was rescued after it disclosed potential losses on loans to other group companies and regulators ordered the lender to raise more capital.

Credit Suisse said it helped Banco Espirito Santo set up three special-purpose vehicles in 2001 and 2002 at the Portuguese bank’s request by acting as an arranger and was involved in the issuance of the SPV’s notes. The securities contained debt of various companies linked to the Espirito Santo family and were used to finance the group’s companies, the newspaper had said.

“Credit Suisse has no visibility as to any onward distribution by the BES branches or subsidiaries,” Credit Suisse said today.

Credit Suisse also said it has no market or credit risk exposure to the instruments in question. The SPVs sold notes between 2001 and 2008, and again in January 2012 and February 2014 when they raised net proceeds of about 202.5 million euros ($270.3 million), Switzerland’s second-biggest bank said.

To contact the reporters on this story: Elena Logutenkova in Zurich at [e-mail]; Jeffrey Vögeli in Zurich at [e-mail] To contact the editors responsible for this story: Elisa Martinuzzi at [e-mail] Simone Meier